EID Parry, a Murugappa Group company, has seen the losses from its sugar business widening to Rs 1.63 billion during the quarter ended June, compared to a Rs 132-million loss during the same period last year, due to depressed sugar prices on account of higher production.
On a consolidated level, the operating loss on sugar operations was at around Rs 1.8 billion, compared to Rs 220 million during the same quarter last year, according to the company. However, the nutraceutical business, which the company has been growing in order to address the risks in the sugar business, has seen a multifold growth in terms of profit and around 10 per cent in terms of segment revenue.
"The performance of the company in Q1 2018-19 has been largely impacted due to the depressed sugar prices on account of higher sugar production in the country compared to previous sugar year. The price of sugar has gone down below cost of production due to mismatch in demand and supply position of sugar," said S Suresh, the company's managing director, in a statement.
The Government of India has been supportive in taking necessary measures like the monthly release order mechanism and specifying the minimum support price for sugar at Rs 29/Kg from the month of June to maintain stability in sugar prices. However, low monthly release order quantity has impacted sales, profitability and cashflows of the company.
The export quota and the related subsidy given by the government to sugar mills is not beneficial to the company on account of lower international sugar prices compared to the domestic market and also the lower government incentives, added Suresh.
Meanwhile, the nutraceutical division has posted a profit before interest and tax of Rs 44.1 million, as compared to Rs 11.1 million during the same quarter of the previous year. While the nutrient and allied business, crop protection and distillery also posted a growth in net profit, co-generation has seen the loss before tax and interest increasing to Rs 212.8 million, compared to a loss of Rs 125.8 million during the corresponding quarter last year.
The net loss for the quarter ended June 30, 2018, was around Rs 1.5 billion as compared to a profit of Rs 203 million during the same period of the previous year. The total income saw a decline to Rs 33.70 billion, compared to Rs 33.95 billion during the same period of the previous year.